Correlation Between IPG Photonics and Avient Corp
Can any of the company-specific risk be diversified away by investing in both IPG Photonics and Avient Corp at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining IPG Photonics and Avient Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between IPG Photonics and Avient Corp, you can compare the effects of market volatilities on IPG Photonics and Avient Corp and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in IPG Photonics with a short position of Avient Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of IPG Photonics and Avient Corp.
Diversification Opportunities for IPG Photonics and Avient Corp
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between IPG and Avient is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding IPG Photonics and Avient Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Avient Corp and IPG Photonics is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on IPG Photonics are associated (or correlated) with Avient Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Avient Corp has no effect on the direction of IPG Photonics i.e., IPG Photonics and Avient Corp go up and down completely randomly.
Pair Corralation between IPG Photonics and Avient Corp
Given the investment horizon of 90 days IPG Photonics is expected to generate 55.36 times less return on investment than Avient Corp. In addition to that, IPG Photonics is 1.16 times more volatile than Avient Corp. It trades about 0.0 of its total potential returns per unit of risk. Avient Corp is currently generating about 0.06 per unit of volatility. If you would invest 3,205 in Avient Corp on August 28, 2024 and sell it today you would earn a total of 2,112 from holding Avient Corp or generate 65.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
IPG Photonics vs. Avient Corp
Performance |
| Timeline |
| IPG Photonics |
| Avient Corp |
IPG Photonics and Avient Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IPG Photonics and Avient Corp
The main advantage of trading using opposite IPG Photonics and Avient Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IPG Photonics position performs unexpectedly, Avient Corp can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Avient Corp will offset losses from the drop in Avient Corp's long position.| IPG Photonics vs. Teradyne | IPG Photonics vs. Ultra Clean Holdings | IPG Photonics vs. Onto Innovation | IPG Photonics vs. Cohu Inc |
| Avient Corp vs. Axalta Coating Systems | Avient Corp vs. H B Fuller | Avient Corp vs. Quaker Chemical | Avient Corp vs. Cabot |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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